[sunny87degrees]

On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $312,177. The journal entry to record the first interest payment using the effective interest method of amortization is:
A. Debit interest expense $12,487.08; debit premium on bond's payable $1,012.92; credit cash $13,500.00
B. Debit interest payable $13,500; credit cash $13,500
C. Debit interest expense $12,487.08; debit discount on bond's payable$1,012.92; credit cash 13,500
D. Debit interest expense $14,717.70;credit premium on bonds payable$1,217.70; credit cash $13,500
E. Debit interest expense $12,282.30; debit premium on bonds payable $1,217.70; credit cash $13,500

Please show me how you got the solution, I have several questions similar to this one.

[ScottGem]

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